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EU, Australia fight U.S. dairy promotion expansion

Congress is set to provide dairy farmers with more money for industry promotions such as " Got Milk" by tapping an unwilling source — imported dairy products.

Both the House and Senate versions of the farm bill include legislation that would assess fees on dairy importers to help pay for the promotions. “This is a matter of fundamental fairness,” said Rep. Tammy Baldwin, D-Wis., who sponsored the measure along with Sen. Russ Feingold, D-Wis. “It' s wrong for dairy farmers in my district to bear the burden of paying for the marketing that importers benefit from.”

But dairy-exporting continents like Europe and Australia say the legislation is anything but fair — arguing their specialty products gain little from generic dairy advertisements. The European Union says the fees amount to a new tariff and could lead to a World Trade Organization challenge.

“The measure' s compatibility with U.S. obligations under the WTO is questionable and we will carefully examine this in the event of the measure becoming law,” Guenter Burghardt, EU' s ambassador to the United States, said in a letter to Senate Agriculture Committee Chairman Tom Harkin, D-Iowa.

Baldwin countered that U.S. promotions for beef, pork, cotton and other products assess fees on imports, without any findings that they violate international trade law.

A House-Senate conference committee, which is reconciling differences in the farm bills, will decide the dairy legislation' s fate.

U.S. dairy farmers pay 15 cents per hundred pounds of milk sold for the promotions, which include celebrities wearing milk mustaches and commercials touting “Ahh, the power of cheese.” Since it takes 10 pounds of milk to make a pound of cheese, imported cheeses would be assessed roughly 1.5 cents a pound for the U.S. promotions.

According to the National Milk Producers Federation, that would bring in an additional $7 million to $8 million a year for the program, which currently gets $240 million a year from U.S. dairy farmers.

Baldwin said dairy farmers in her district have urged a change in the program to get importers to pay for it — not because the program needs money, but out of a sense of fairness.

But dairy producers in Europe and Australia argue that their cheese products receive no benefit from the program. And other dairy exports, such as milk protein concentrates, are not advertised as part of the promotion, they say.

“We see it purely as another import levy on our products,” said Gerard Kiely, the EU delegation's councilor for agriculture, fisheries and consumer affairs. According to the U.S. Dairy Export Council, other countries don' t require their importers to pay for promotional campaigns.

Baldwin noted that dairy imports increased last year and argued that at least some of that growth was due to the promotional campaigns.

Dan Lynch, a vice president and partner of Jana Foods, a cheese importing company in Palisades Park, N.J., disagreed. “Did you ever seen any French brie in those promotions?” he asked. “That's the kind of cheese that our members sell.”

Both cheese importers and foreign cheese exporters are lobbying against the legislation. The Australia Dairy Corp., which has its own dairy promotion called “Dairy Good,” has hired lobbyist Patrick Fazzone. He noted that state promotion programs receive 10 cents back for every 15 cents collected, money that is spent on promoting specific state products.

Phil Fraas, a lobbyist for the Cheese Importers Association, argued that even the non-state promotions are of little use to sellers of imported cheese. “One of the many reasons we' re against this is that the domestic program doesn' t promote the kind of cheeses we sell,” Fraas said, such as soft cheeses and specialty cheeses.

Conference committee member Collin Peterson, a Democratic congressman from Minnesota, was unsympathetic to that argument. “My farmers make the same complaints,” said Peterson, who represents rural northwest Minnesota. “They question whether it will do them any good.”

Fraas and Fazzone are urging the conference committee to attach a condition to the bill: that it not go into effect unless the Department of Agriculture determines it complies with international trade law and provides a direct benefit to importers.

But Fraas conceded that with both Houses of Congress already passing the bill, getting it changed in conference will be a tall order. “That makes it very difficult, no question about it,” he said.

Dale Hathaway, executive director of the National Center for Food & Agricultural Policy, said if the law passed, countries would likely mount a WTO challenge. “Right now, they' re not feeling particularly friendly to the United States,” he said, alluding to President Bush' s decision to impose tariffs on steel imports.